Introduction
In 2016, the world was shocked by the news that the UK citizens voted to exit the European Union (EU) by a small margin. After the referendum that took place on June 23, 2016, the UK started the process of withdrawing from the EU, which is commonly known as “Brexit” (Hobolt, 2016). While the referendum favoured leaving the EU, more than 48% of the UK citizens wanted the country to remain in the EU (Hobolt, 2016). One of the primary concerns of the UK citizens, among all others, was the economic consequences of the matter. Indeed, Brexit was expected to negatively affect business relations and Eurozone supply chains, as well as weaken both Euro and the British pound (Ramiro Troitiño et al., 2018).
At the same time, the predictions for the UK automotive industry was not so pessimistic. On the one hand, domestic car sales were expected to slow their growth or even decrease due to the economic slowdown (Bailey & De Propris, 2017). On the other hand, since Sterling lost value as a result of Brexit, exports were expected to rise, which would have positively affected the output of UK-based automobile manufacturers (Bailey & De Propris, 2017). Thus, shortly after the Brexit vote, the forecasts for the UK automotive industry were favourable.
Problem Statement
The COVID-19 pandemic had a negative effect on the UK economy in general and the automotive industry in particular (Hoeft, 2021). The pandemic made it challenging to measure the impact of Brexit on the automotive industry. Thus, there is scarce evidence concerning the impact of Brexit on the automobile market in the UK. The present small-scale research aims at addressing this problem by conducting a quantitative study using the data collected from business students.
Previous Research
Previous research demonstrates that the future of the UK automotive industry is associated with significant uncertainty. Bailey and De Propris (2017) stated that Brexit is expected to have low to no effect on the production of new automobiles in UK-based companies, as the export should rise. At the same time, domestic sales are expected to slow their growth or even decrease due to the economic consequences of Brexit (Bailey & De Propris, 2017). At the same time, tariffs and friction may impact the industry, which can increase the costs of different parts of automobiles and decrease the efficiency of the supply chain in general (de Ruyter, 2018). In 2019, the UK automotive industry lost 9% of its volume due to Brexit (Holweg, 2019). While the opinions of experts on the future of the automotive industry differ, all of them agree that it will highly depend on the Brexit process deals.
As for the impact of Brexit on the UK economy, experts agree that it will be mixed. Brexit will negatively impact the UK economy due to paying off the “divorce bill,” breaking ties with European business partners, and fluctuations in the currency value (Thissen et al., 2019). At the same time, Brexit is forecasted to have a positive impact on the UK economy, as the country will not have to contribute to the EU economy and oblige to its policies (Minford, 2019).
Research Question and Hypothesis
The review of literature revealed that there are few studies that assess the effect of Brexit on the automotive market starting from 2020, after the COVID-19 breakout. Moreover, there are no quantitative studies that compare the effect of Brexit on the UK automotive industry and on the UK economy in general. The present paper aims to address this gap in literature and answer the following research question:
Brexit had a higher negative impact on the UK economy in general in comparison with the impact on the UK automotive industry as perceived by the UK business students.
The purpose of the present research is to compare the effect of Brexit on the UK economy in general and on the UK automotive industry in particular as perceived by the UK business students.
Sampling
UK business students were the target population of this study. The inclusion criteria were being currently enrolled in one of the UK universities and living in the UK for at least seven years. The exclusion criteria were being less than 18 years old, as it would be improbable that the student would be able to evaluate the impact of events that happened more than five years ago. All the questionnaires that had mission answers were excluded from data analysis as well.
Convenience sampling was used for collecting primary. According to Saunders et al. (2019), convenience sampling is associated with recruiting participants that are readily available to the researcher. This sampling method is usually used for qualitative research, as it is a non-probability sampling method. This approach to recruitment of participants is associated with significant bias, as members of the population do not have an equal chance to participate in the study (Saunders et al., 2019). However, this method is cost- and time-effective, which was crucial for completing this pilot research.
Instrument
The instrument for the present study was self-created by the researcher. It has three sections with a total of 11 questions, including three questions on demographics, four questions on the impact of Brexit on the UK economy, and four questions on the impact of Brexit on the UK automotive industry. The demographic items were multiple-choice questions, while the content questions were based on a five-point Likert scale. The validity of the questionnaire was not assessed; therefore, there is no reliable information about the validity of the instrument.
Procedures
A quantitative approach was used to answer the research question. According to Saunders et al. (2019), quantitative approaches are most appropriate for testing a hypothesis or measurement. Quantitative methods are associated with using surveys and statistics to answer a very narrow question. Qualitative methods are used for exploring ideas, feelings, thoughts, and meanings. Since the purpose of the recent paper is to test a hypothesis, a quantitative approach was considered most appropriate for the research.
A cross-sectional design was utilized to answer the research question. The choice of the method was mainly predetermined by the approach and the timeframe allocated for the research. Saunders et al. (2019) state that the most reliable results are produced by experimental studies. However, there was not enough time and resources to conduct a full-scale experimental study. Moreover, it was difficult to design an experimental study that could answer the identified research question. Since cross-sectional studies are usually selected for their time- and resource-efficiency, it was decided to utilize the approach for the pilot study.
The survey was created using Google Forms. The questionnaire was distributed among friends and colleagues of the researcher through social media. The participants were sent a description of the study and an invitation to participate with an attached link to Google forms. A total of 37 questionnaires were distributed, and 31 replies were received. According to Saunders et al. (2019), the sample size is considered appropriate for a pilot study.
Data Analysis and Discussion
The results of the analysis used a sample of 31 participants. The majority of participants (64.5%) were aged between 18 and 25, 32.3% of the participants were aged between 26 and 35, and one participant was aged between 36 and 45. The sample consisted of 54.8% females and 45.2% males. Additionally, the majority of the sample had a part-time job (54.8%), while 22.6% had a full-time job, and 22.6% were unemployed.
Two variables were examined. The first variable was Brexit’s impact on the UK economy, and it was measured as a sum of answers to questions Q4-Q7. The second variable was Brexit’s impact on UK’s automotive industry, and it was measured as a sum of replies to questions Q8-Q11. A paired-sample t-test was used to compare the mean values of two variables, which is appropriate according to Saunders et al. (2019). There are two types of Student’s tests that can be used to compare means. Independent-sample t-tests are used when researchers need to compare means from independent two groups. Paired-sample tests are to compare the means of two variables of the same subject. Commonly, the data for paired-sample t-test is collected from the same subjects at a different point in time to compare if an intervention was successful (Saunders et al., 2019). It was decided to use a paired-sample t-test to compare the means, as the data was collected from the same subjects on two variables.
A paired sample t-test used to compare Brexit’s perceived effect on the UK economy (M = 13.06, SD = 4.52) and Brexit’s perceived effect on the automotive industry (M = 12.9, SD = 4.41) revealed that there was no statistically significant difference between the mean of the variables (t(30) = 0.47, p = 0.687). Since the p-value was above the alpha level of 0.05, the null hypothesis was accepted, and the hypothesis stated in Chapter 2 was rejected. This implies that the perceived impact of Brexit was similar on the UK’s automotive industry and the UK’s economy in general.
The results of the analysis revealed that students perceive the effect of Brexit on the UK’s economy in general, and the UK’s automotive industry was similar. Such results were inconsistent with the forecast provided by Bailey and De Propris (2017). The reason for such inconsistency may lie in the fact that Bailey and De Propris (2017) made their forecast shortly after the Brexit vote. At the time, there was a higher uncertainty about the effect of Brexit on the UK’s automotive industry. As mentioned in the literature review, in 2019, the UK’s automobile market lost 9% of its volume in comparison with the pre-Brexit period (Holweg, 2019). The breaking of ties with the European partners and the effect of the weakened pound may have negatively affected the industry more than it was expected by Bailey and De Propris (2017). Today, students have more information on the effect of Brexit on the UK’s economy. Another reason for such inconsistency may be the result of students’ ignorance about the automotive industry in the UK. Since students may be unaware of the current state of the automotive, it may have affected the validity of the instrument.
Conclusion
While the results revealed that there was no statistically significant difference between the perceived effect of Brexit on the UK’s economy and its effect on the automotive industry, the results cannot be considered reliable. The first limitation of the present study is the sample size. Even though it is adequate for a pilot study, it is not enough to draw reliable conclusions. The second limitation is the instrument, as it was not validated. There is no guarantee that the instrument measured the variables reliably. The final limitation is the target population, as business students may not have enough knowledge in the UK’s automotive industry and base their judgement on the knowledge about the UK’s economy at large. Thus, it is crucial that the results of the present research are interpreted correctly. This research demonstrates that the UK business students saw no difference in the effect of Brexit on the UK’s economy and its effect on the UK’s automotive industry.
Another interpretation of the results of the present research is that the UK business students saw a high dependency between the tendencies in the UK’s automotive market and UK’s economy in general. Therefore, the changes in the UK’s automotive industry can be predicted by the changes in the UK’s economy in general. However, further research is required to confirm this hypothesis.
References
Bailey, D., & De Propris, L. (2017). Brexit and the UK Automotive Industry. National Institute Economic Review, 242(1), R51–R59. Web.
Hobolt, S. B. (2016). The Brexit vote: A divided nation, a divided continent.Journal of European Public Policy, 23(9), 1259–1277. Web.
Hoeft, F. (2021). The case of sales in the automotive industry during the COVID‐19 pandemic. Strategic Change, 30(2), 117-125. Web.
Holweg, M. (2019). Death by a thousand cuts: The strategic outlook for the UK automotive industry beyond Brexit. Web.
Minford, P. (2019). The effects of Brexit on the UK economy. Cardiff Economics Working Papers. Web.
Ramiro Troitiño, D., Kerikmäe, T., & Chochia, A. (2018). Brexit. Springer.
de Ruyter, A. (2018). Brexit and the UK automotive industry: The report launch. Web.
Saunders, M. N. K., Lewis, P., & Thornhill, A. (2019). Research methods for business students. Pearson.
Thissen, M., van Oort, F., McCann, P., Ortega-Argilés, R., & Husby, T. (2020). The implications of Brexit for UK and EU regional competitiveness. Economic Geography, 96(5), 397-421. Web.